NEW YORK (CNNMoney.com) -- Regulators shuttered a Minnesota bank on Friday night, for the 16th failure of 2010.
The bank, 1st American State Bank of Minnesota, in Hancock, was closed by the state's Department of Commerce. The department named the Federal Deposit Insurance Corp. the receiver.
Customers of the failed bank are protected, however. The FDIC covers accounts up to $250,000.
The FDIC entered into a purchase and assumption agreement, in which it transfers control of the failed bank to a healthy institution, with Community Development Bank, FSB. The 1st American's two branches will reopen Monday under their new ownership.
Community Development will assume 1st American's $18.2 million in assets and $16.3 in deposits. Community Development entered into a loss-share agreement with the FDIC on $11.7 million of 1st American's assets.
Friday's closure will cost the FDIC approximately $3.1 million.
Customers of 1st American can access their money over the weekend by writing checks or using ATMs or debit cards. Checks will continue to be processed, and borrowers should make mortgage and loan payments as usual.
The FDIC also said customers should continue to use their existing branch until they receive notice that the takeover has been completed.
A total of 140 banks failed in 2009, the highest since 1992, when 181 banks failed. But that count is far from 1989's record high of 534 closures which took place during the savings and loan crisis.
Last year's spike has raised concerns about the federal deposit insurance fund, which has slipped into the red for the first time since 1991.
The fund was $8.2 billion in the hole as of the end of September. But that includes $21.7 billion the agency has earmarked for future bank failures.
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